Spain

Deepening of EMU cannot wait until all countries have carried out all their domestic reforms, both risk sharing and risk reduction need to proceed simultaneously. In fact, all euro area countries are exposed to the risk of an incomplete monetary and economic union but with very asymmetric costs. This column, part of the VoxEU debate on euro area reform, argues that this risk can only be tackled with common instruments and policies at the European level, whose mere existence will reduce not only its magnitude but also its asymmetric consequences.

Note: this is the first of my trilogy, “Sedition in Catalonia” explaining the situation in Catalonia. Originally published on Medium October last year.

After many people asked me about Catalonia I have decided to put my thoughts on paper. I am not an expert on the Catalan issue, but I am interested in all topics in international political economy and unfortunately this has become one. [*This trilogy has been updated on the 19/11/2017]

As a Spanish and European citizen, I write these lines mired in profound sadness. Something has gone wrong in my country. I ask myself how can it be that Catalonia, one of the most prosperous, autonomous, cosmopolitan, modern and attractive regions on earth is about to jump over a cliff? The situation is so tense that the level of anxiety, doctor visits and sleepless nights has increased both in Catalonia and the rest of Spain over the past weeks. After the so-called referendum of the 1st of October 2017 — when images of riot police beating voters reached all corners of the world — most of my colleagues at Elcano and myself were not able to sleep properly. We feared that the next weeks would be dramatic, and so it has been.

On the 10th of October Carles Puigdemont, the president of Catalonia, first made a unilateral declaration of independence, and seconds later suspended it — for the moment — calling for dialogue. A few days later Mariano Rajoy, the President of Spain, sent him a letter asking whether he had declared the independence. If so he would trigger article 155 of the Spanish Constitution, which suspends the autonomous status of Catalonia. However, if Puigdemont were to backtrack Rajoy would be ready to start a dialogue, but always within the current legal framework. In other words, Rajoy sent a clear message to Puigdemont: “secession is not in the cards, no matter how hard you push”.

However, Puigdemont has been pushing hard because in his response letter he explained that the independence was declared, and then suspended, but if the Government of Spain would not come to the negotiating table now and trigger article 155, the Catalan Parliament will vote the declaration of independence. This apparent threat let Rajoy to call for the application of article 155 by the Senate starting on Friday 27 October and as a response [on the same day, Puigdemont finally went for the unilateral declaration of independence in the Catalan Parliament. The brinkmanship game went all the way to the edge. Catalonia is now governed out of Madrid, Rajoy has called for new elections in Catalonia to be held on the 21 December while Puigdemont has escaped to Brussels.]

This game of chicken, which reminds us to that between Syriza’s Government and the Eurogroup in 2015, has, of course, its economic costs. During this diplomatic back and forth between Puigdemont and Rajoy, most of the big companies of Catalonia, including the two big banks: CaixaBank and Sabadell, have moved their legal headquarters to other parts of Spain. Business people have had enough of the independence dream and have started to vote with their feet. Roughly 150 companies have moved out of Catalonia every day since October 2 reaching now more than [2,300], but the [ former members of the] Catalan Government do not seem to care much. They say it is a ploy from Madrid against them.

To bring even more tension to the drama, on 16th October, Carmen Lamela, a judge from the Spanish High Court, sent the two leaders of the main pro-independence civil society organizations, Jordi Sánchez (ANC) and Jordi Cuixart (Òmnium) [and on 2 November, after the proclamation of the independence, the entire former cabinet of the Generalitat (the Catalan Government) — apart from Puigdemont and a few other members who fled to Belgium –] into custody on charges of sedition. Yes, sedition, which the Oxford dictionary defines thus: “conduct or speech inviting people to rebel against the authority of a state or monarch”. Yes, indeed, sedition is what we [have witnessed] in Catalonia. There is no better word to describe it. And, believe me, it is not for a noble cause (Ghandi would not approve). I will try to explain why in the following paragraphs.

As a Galician who speaks Galician at home with his parents, and was born and raised in Basel (Switzerland), where the language used in daily life is baseldütsch (which is quite different from Hoch Deutsch, High German), I have always been sympathetic to the Catalan desire to preserve the regional language and culture. I have also admired the Catalan people’s capacity to be united, fight for more autonomy and, whenever their moderately conservative “nationalist” party Convergencia i Unió (CiU) was necessary to build a majority in the Spanish parliament, extract from the central government in Madrid as many concessions and privileges as possible. Yes, in certain ways, I admired the Catalans. I thought we Galicians should do the same. Only thus would we get the infrastructures necessary to be connected to the outer world. Bear in mind that even today the train journey from Madrid to A Coruña (where my parents live) lasts six hours, while that from Madrid to Barcelona two hours and a half (the distance is similar).

Politics, democratic politics that is, is a game, and the Catalans have always played it rather well. So much so that they have convinced many people, including myself until relatively recently, that they should have the so-called “right to decide” their future (the Catalan version of the right of self-determination). As the Scots and the Québécois had the opportunity to decide in a referendum whether they wanted to be independent or not, why shouldn’t the Catalans have the same right? Overall surveys say that roughly 80% of Catalans want to have a vote on this matter. Following this logic, I have always thought that if one part of Spain wants to leave the union, then the rest of Spain has a problem. It is not attractive enough. Perhaps a referendum (as I thought when I was living in the UK about a referendum on the EU) would finally make the case easier to understand. Intellectuals and politicians would come out and explain why it makes sense for Catalonia to be part of Spain.

You cannot just say: “oh, I don’t like this type of democracy. I have tried to change it, but I can’t, so I will create my own democracy”

However, I was wrong on Brexit and on Catalonia too. In recent years after many discussions with my cousin, who has Galician origins but was born in Catalonia, feels Catalan and speaks Catalan daily, I have started to change my mind. He pointed out to me in clear terms that according to the Spanish Constitution — incidentally approved by roughly 90% of the Catalans in 1978 — the only sovereign is the Spanish people and any decision affecting them needs to be decided by the Spanish sovereign as a whole. In other words, if Catalonia votes to be independent this would affect him as a Catalan but also me as a Spaniard so I should have the same right to vote than him. Looked from this angle, things are slightly different: Spain has a problem if Catalonia wants to secede but Catalonia, or at least those that want independence in Catalonia, have equally a problem if they are not able to convince the rest of the Spaniards that it is in the best interests of the Spanish sovereign for the Catalans to have “the right to decide”.

The democratic tools are certainly there. The Spanish Constitution can, and could, be reformed in order to allow for a binding referendum in Catalonia. To do that it is necessary to have two thirds of the votes in the Spanish Parliament. It is a high bar. But all advanced western democracies have such a high threshold for an institutional change of this order. The separatists in Catalonia claim that this argument is fallacious. It will be impossible for them to ever reach a two-thirds support in the Spanish Congress and therefore -after asking for years to negotiate- they are now compelled to pursue the unilateral route. This is a weak argument. You cannot just say: “oh, I don’t like this type of democracy. I have tried to change it, but I can’t, so I will create my own democracy”.

While no Spanish Government has ever had an electoral mandate to negotiate a referendum with the Catalan authorities (because the overwhelming majority of Spaniards do not want it and this needs to be respected, something that the secessionists in Catalonia forget), over the years, support for a binding referendum has increased in Spain. As a matter of fact, Podemos, the new left-wing party which obtained over 20% of the votes in the last general election in 2016, and which draws support from all over Spain is in favour of the idea. Who knows? Perhaps in 10 or 20 years the issue would have ample support among Spanish citizens.

But no, the Catalan secessionists have not had the sufficient patience nor the necessary long-term strategy to convince the rest of Spaniards. Independence needs to be achieved now, no matter what. This is not very democratic.

The pro-independence movement is broad and heterogenous. Its glue is a formidable idea: the sentiment of having the chance to build a new country from scratch. It is like having a blank sheet in front of your eyes and fill it with your dreams and desires. The petite bourgeoisie (the big one is not supporting independence, they are doing well inside Spain and the EU) is hoping to have more influence so that they can get regulations from the new state more suited to them; the professional liberals, and some well-respected Economics professors like Xavier Sala-i-Martin, think they will have a less bureaucratic and corrupt administration and lower taxes like in Switzerland; the socialists believe they can build a more developed well-fare system and make Catalonia like Denmark; the farmers hope to obtain more social recognition and statusand the anarchists and anti-capitalists (which right now support the Government of Catalonia in order for Puigdemont to have the majority it needs in the Catalan Parliament and drive most of the radical agenda) dream of a communist utopia. Yes, you have read right. The petite bourgeoisie and the anti-capitalists are here in the same boat. Very odd indeed but it also shows the strength of these movement of more than 2 million people.

Overall, the buzz word is: regain sovereignty. Take back control. Or in this case, gain for the first time sovereignty and independence, since Catalonia has never been really sovereign (before being part of the Kingdom of Spain it was part of the Kingdom of Aragon). This explains the desire to break free and to insist on the repression suffered during the Franco dictatorship, when speaking in Catalonian was banned and Madrid ruled the region by stealth. This sense of oppression and grievance has developed into a pathology of victimism based on a number of myths that have been debunked by Xavier Vidal-Folch and Ignacio Torreblanca. One of these myths is that an independent Catalonia would continue to be member of the EU. In other words, that there would not be any costs associated with independence. Here the Catalan Government, like Tsipras and Varoufakis before, show that they do not understand how power works in the EU. The European Council, formed by nation-states, will never side with a region that rebels against another member state. This would establish a dangerous precedent. A different proposition would be for Scotland to leave the UK and ask for accession once the UK has left the EU. The power dynamics are very different.

The sad story is that based on all these unfounded myths and grievances a minority of radicals and fanatics have brought Catalonia to the brink, creating a lot of social tension in Catalonia. To the point where Spanish journalist feel harassed and intimidated (see the account of David Alandete). These radicals have a majority in the Catalan Parliament made up of the heterogenous coalition described above but they do not have the majority of the popular vote (this is due to the fact that rural areas are overrepresented compared to urban and less independentist towns). This important detail did not matter on the 6–7 September, however, when they passed the two so-called laws of disconnection (the binding referendum of the 1st of October and the transition to independence). This action was not only illegal, but also illegitimate and one could argue even undemocratic. Not only did it go against the Spanish Constitution, making the whole process illegal according to Spanish law, it also went against the normal reform procedures of the Catalan Statute. Normally to reform the statute or even to undertake substantial decisions of regional importance like appointing and dismissing the director of the Catalan public broadcaster, you need to have two thirds in the Catalan Parliament. The independentists just had a small majority but they rammed through anyway.

For many casual watchers around the world the feeling is that the Catalans just want to vote and that Madrid does not let them. So when people saw the images of riot police beating voters at poll station they clearly sided with the Catalanist cause. The police violence of that day was certainly unfortunate, and in some cases disproportionate, but it was also produced because the Catalan police (Mossos d’Esquadra) did not [do enough to] stop the process in the months and weeks before the poll. It is generally assumed that voting is very democratic. But if it is done without sufficient legitimacy it is profoundly anti-democratic. Imagine if I bring together a big number of neighbours in my street and convince them to hold a referendum on whether we should make our street car-free. We organize the vote and declare that if the majority votes yes, we will shut the street and declare our small independent car-free republic. It is obvious that if we start to put ballot boxes in the middle of the street, soon the police will show up and take away our “right to decide” by the legitimate use force (if need be), while we cry out that this is fascist, antidemocratic and goes against basic human rights. I guess the absurdity of this example shows the level of mass madness that we have reached.

The acronym in Spanish of unilateral declaration of independence is DUI. This is what the Catalonian government is now threatening with doing. DUI in the US is short for “driving under the influence” of alcohol or drugs. This is what appears to happen. These drugs have been a massive campaign of propaganda and fake news that has let many in Catalonia to believe that their region would soon be independent. To the point, I am told, that many people believed that in a matter of weeks after the 10 October they would get in their homes their new Catalan passports. MAD! Not even Cervantes or Valle-Inclán would come up with that. There is a Spanish word for this: esperpento.

Fortunately, the nationalist dream is beginning to vanish. The reality is kicking in. The big companies are moving their HQs, the economy is starting to suffer from this independentist folly, [the escape of Puigdemont to Brussels was portrayed in the international press as a circus], none of the other 27 capitals in the EU support the “Catalan cause”, neither does Washington and certainly not Beijing, so slowly many independentists are starting to doubt whether this was a good idea at all (dissertation is happening, accusations of treason are emerging). Faced with the application of article 155 and the choice of calling the DUI or new elections, the independentist coalition is falling apart. [ Splits in the broader movement are starting. It appears that the right wing PDeCAT will not run together with the more radical, left-wing republican party ERC in the elections that will take place on the 21st December. In many ways, although they have a number of martyrs in jail, it will be difficult for them to tell people again that independence is possible. The separatist leaders told their followers that if they crossed the desert there would be an oasis on the other side but after the journey they have discovered that there was no water on the other end.]

Soon enough the efforts in Spain will not be directed to stopping this collective suicide attempt but rather focus on how to heal the wounds, and glue together the Catalan society again. A task as Herculean as finishing the Sagrada Familia. Many believe that a legal, agreed referendum of secession would do the trick. This happened in Scotland and Quebec and it worked fine and this is why almost 80% of Catalans want to vote. As I said, for some time I was sympathetic to the idea, but not anymore. As Pau Marí-Klose and Ignacio Molina have argued, a referendum would not solve anything. Most Catalans want to vote because they believe they will win, it doesn’t matter on which side they stand. Given the fractures that exist right now in the Catalan society, a win or lose binary option would only divide the Catalans even more. We would have another Ulster in our hands. I believe the solution must be to reform the Spanish Constitution in a way that it can better embed Catalonia and the rest of regions within the Spanish state. The solution must be federal. The regions could have more self-management of their taxes, for instance, while the richer ones would still contribute the same amount to the common pot.

If the Catalans as a whole want to be part of the EU — and the majority do — they need to abide to the principle of solidarity and this means that they need to start within Spain. More autonomy in collecting taxes, though, should be compensated with more technical monitoring and supervision from the centre in key areas such as the cohesiveness of the internal market and the avoidance of discrimination and separatist propaganda in the education system, for example. Here a fine line needs to be drawn. Everyone, teachers included, should have the right to free expression. But if this becomes systematic indoctrination calling for independence and sedition based on hate speech, it should be disallowed.

I have never heard so many times in Spain the sentence: “the law is the law and needs to be respected” as in the past 12 months. I hope this is now applied in all spheres, from tax evasion, to traffic to environmental pollution.

True. Reforming the Constitution will not be easy. However, this is the only way forward. The PP and PSOE have already agreed to start a commission to do that. It would be important to include the new parties Ciudadanos and Podemos, but also the moderate nationalist parties from Catalonia and the Basque Country, if not the process lacks legitimacy. In Germany, every certain time the Länder and the Federal Government renegotiate the distribution of competences and the fiscal balances. They set up a commission and after a couple of years of negotiations a deal is struck. I hope my country can do the same. The 1978 Spanish Constitution was drafted following the German model, even article 155, is taken from there. Hopefully the new reform will also find inspiration in what is a relatively stable (although not perfect) German federalism. The first thing to do perhaps is to establish clearly the distribution of competences. This would stop the current temptation to pull away more competences from Madrid, and avoid the counter-move: attempts from Madrid to re-centralise them.

In many ways this crisis can have a silver lining, or even several. First of all, it should be a wake-up call for all Spaniards. Spain has come a long way in the past 40 years. It has set up the institutions to build a stable democracy but now has come the time to modernize these institutions. Corruption needs to be fought relentlessly and meritocracy and transparency (and the mechanisms of external evaluation at all levels of the administration) need to be improved. I have never heard so many times in Spain the sentence: “the law is the law and needs to be respected” as in the past 12 months. I hope this is now applied in all spheres, from tax evasion, to traffic to environmental pollution. Another potential positive outcome is that suddenly a lot of Spaniards have started to be proud of their flag. The Spanish flag hangs today from millions of balconies and windows all over Spain, including Catalonia. This has never happened before (except when Spain won the football world cup, of course). When it comes to politics, the Spanish flag was always associated to right wing, or even extreme-right wing, Francoist, movements. It is good that the Spanish left, and many not politically or ideologically driven citizens have started to embrace the flag. If Spain wants to become a modern, advanced democracy, its citizens need to develop a sense of ownership and belonging. So far this was in scarce supply.

Another positive outcome might be that the Spanish state, its governments and the elites in Madrid and the rest of Spain might be more inclined to be more present and engaging with Catalonia. As a foreign ambassador told me recently, how many times did the ministers and the secretaries of state of the Government of Rajoy (and Rajoy himself) visit Catalonia in the past five years? If the Spanish state wants to earn more allegiance from the Catalans, it must be more present there. And this does not only mean putting more money and infrastructures there. Sometimes symbolic gestures can do more than hard cash. Vice versa, the Catalan elites should also engage much more with Madrid and the rest of Spain. I am surprised to see so few Catalans in my professional circles in Madrid. I meet people from all corners of Spain but very few Catalans. I see way more Basques than Catalans, for instance. And I don´t think that the Catalans are marginalized. Sometimes the independentists claim that no Spanish prime minister was Catalan, but we had only five prime ministers in our young democracy and we have 17 regions, so the criticism is unfounded. Catalonia had powerful ministers like Narcis Serra and Josep Piqué. It goes back to what I said, if you want to be liked you need to persuade. And this needs to be done on both sides.

Finally, let me go back to my Swiss-Galician-Spanish-European roots. In the new arrangement, after this dramatic crisis, Barcelona will not have a state behind to compete with Madrid. But this should not be an obstacle for Barcelona to be a vibrant, cosmopolitan and prosperous place. Zürich and Basel are not the capitals of Switzerland and they are precisely that. With the right amount of autonomy Barcelona can thrive and so can Catalonia. Switzerland does not have a seat at the European Council either and it is doing more than fine in this globalised world. The Catalan independentists might say, well that’s what we want. We want to be like Switzerland. But the question is: at what price? With which support? With which legitimacy? After analysing how they have operated in the past few years, [how they have tried to organise parallel state institutions totally outside the legal framework and how they have tramped on the rights of the rest of Catalans and Spaniards (yes, indeed, how they have undertaken acts of sedition)], my answers to these questions are firm: at a very high price, with very little support and with even less legitimacy. Thus, do not call for a binding referendum on independence any time soon. Unfortunately, this idea is now burned, and it has been burned by you!

P.S These are my on-going thoughts on the Catalan question (a moving target). I might edit some of the parts or write a new part in the future. As mentioned, I have now updated the trilogy on the 22/11/2017. Amendments are in [brackets]

Often it is claimed that the trigger for the recent independentist wave was the 2010 Constitutional Court rejection of some of the key articles in the new Catalan Statute of 2006, which was then approved by the Catalan Parliament with two-thirds support, by the Spanish Parliament with an absolute majority (although crucially without the support of the conservative People’s Party, PP) and was ratified by the King of Spain, the head of state. However, as Victor Saura explains, the demonstrations of the 11 September — the Diada, the national day of Catalonia and showcase of the mobilisation capacity of the independentist movement — in 2010 and 2011 were very small. They became massive, of around 1 million people, only from to 2012 onward.

This shows two things. The rejection of the Constitutional Court of some of the key aspects of the 2006 Catalan Statute, especially those centred on acquiring further autonomy in the judicial system, were not that disproportionate. Yes, it upset and radicalised the most die-hard secessionists, but not the general public (as my colleague Ignacio Molina and I have explained somewhere else, it is important to note that in Catalonia there have always been three thirds of voters. One third pro-independence, one third Spanish unionist and one-third neutral, who spoke both Spanish and Catalan and was not committed either way. These are those that have moved to the extremes now).

Legally, and even politically, the approval of the 2006 new Catalan statute was controversial. The Spanish constitution incorporates a lot of flexibility when it comes to negotiate the distribution of competences between the central government and the autonomous regions, but it has its limits. And some of these limits were crossed by the Catalan statute according to the Spanish Constitutional Court. That’s on the legal side. On the political side, asCésar Colino and Jose A. Olmeda explain, it attempted to change the Spanish Constitution by the backdoor in order to avoid the blockage of the PP party.However — for it to last — it seems logical that any change in the Spanish Constitution would need to count with the support of the two main parties of Spain: the socialist party, PSOE, and the conservative, PP.

So if the 2010 rejection of the Catalan statute by the Constitutional Court did not really spark mass support for independence, what did? There is a dossier by Elcano explaining several reasons (the matter is complex) but according to Saura, and the thesis seems plausible, the most important one was the economic crisis and the discontent against the austerity policies adopted to fight it (remember that the 15M occupy movement started in Spring 2011) which convinced the then president of Catalonia Artur Mas to embrace the independence cause to stay in power. Yes, faced with recession and a proliferation of corruption scandals in his party CiU, Mas used an old trick: when there is discontent at home you pull out the card of nationalism and the anger and frustration is diverted toward an external enemy. In this case, the PP government of Rajoy, which came into power at the end of 2011 and from 2012 introduced austerity measures all over Spain.

The PP is a relatively easy target for the independentist propaganda in Catalonia. It is seen as an external political force for most Catalans. It is like the Tories in Scotland. It draws little support and therefore it can be presented as an external agent that oppresses and extracts. This leads to generalisations like “Spain robs us”, we are the Catalans, the hard-working ones, and the Andalusians from the south are “lazy and waste our money”. For many, the PP has also failed to modernise. So far there are no internal primaries (something unusual for a political party in Western Europe), so it is easy to present it as an old-guard, old-fashioned, hierarchical party, and thus consider the current Rajoy cabinet as an authoritarian, Francoist government (an insult to the victims of Franco, by the way; Rajoy is far from authoritarian) that does not respect basic human rights, like the right of self-determination, or its Catalan equivalent, the right to decide your future.

I guess if you are from Castilla, Madrid or Andalucía speaking another language of Spain other than Spanish sounds weird. You think everyone speaks Spanish at home. This difference is seen with surprise and sometimes suspicion, and this should not be the case.

Certainly, many people in the PP party and a lot of the elites in Madrid and other parts of Spain (especially south of the Ebro and the Duero rivers) do not understand the cultural and even national diversity that exists in Spain. When I tell them, I speak Galician at home I often get strange looks. It appears as if they were doubting my allegiance to Spain. I guess if you are from Castilla, Madrid or Andalucía speaking another language of Spain other than Spanish sounds weird. You think everyone speaks Spanish at home. This difference is seen with surprise and sometimes suspicion, and this should not be the case. As many foreign observer and visitors point out, all Spaniards should embrace the cultural diversity of their country. They should accept that Spain has four official languages: Spanish, Catalan, Basque and Galician.

In Switzerland that is certainly the case. Every single canton has its own dialect. People from Basel speak baseldütsch, people from Zürich züridütsch, people from Geneva Swissfrench and people from Lugano Swissitalian (which are all different languages). What is the problem? Are they less Swiss because of that? NO! Are they less cosmopolitan because they speak a language that only a few hundreds of thousands of people speak? NO!

Some people in Spain think that teaching in Catalan in the schools of Catalonia has created too many independentists. There is scarce evidence to support this. As María José Hierro argues, most of the indoctrination happens at home. If your parents are nationalists, they are more likely to send you to a catalanist school and hence it is more likely that you become a nationalist. The more diverse the neighbourhood and the school the less likely it is that your children become nationalists. This is why Barcelona, with many more immigrants from Spain and abroad, is much less nationalist than the rural areas of Catalonia. See again the Elcano dossier on this.

The basic principle should be that the teacher should teach in her or his own language. I was taught math, geography and history in baseldütsch, not in High German. This was not a problem. Speaking and being taught in different languages is actually advantageous. It helps your brain to move from one language to another — fast. The problem is when you discriminate against one of the official languages (when you only hire teachers that speak Catalan, for instance), or when you start telling the children that “Spain robs us” or that “we are better than them”. Then the issue starts to become worrisome. Catalonia is an amazing region. It has always been the most international and modern region of Spain. In fact, it has helped to modernise Spain. Today roughly 25% of all Spanish exports have Catalonia as their origins, and of all Spanish export firms, one third are Catalan. That says it all. [This has of course changed now that 2000 of the biggest Catalan firms have changed their HQs to the rest of Spain. In certain ways it mirrors what happened in Canada in the 1990s when due to the legal uncertainty produced by the referendum in Quebec, business moved from Montreal to Toronto.]

However, like Britain with the EU, a lot of this success is due to be part of a larger single market, the Spanish market and this is not acknowledged sufficiently. To the contrary, many English and Catalans suffer from the same ill. Due to their relatively glorious past (which is a fact), many believe that they are better than their neighbours. The English in regards to their European neighbours (and also in regards to the Scots, Welsh and Irish one should say), and the Catalans when compared to their Spanish peers. This sense of superiority makes them sit uncomfortably in a wider political community. They don’t like to be just another member of the club. They would like to run the club and if they can’t, they get frustrated and want to leave. There is one word that describes this: nationalism. Nationalism based on a supremacism that leads to exclusion.

A foreign journalist asked me [recently] whether the Catalan issue was all about money, that if Catalonia were poor, they would never want to be independent. In certain sense he was right. The Catalan independentists are not the Zapatistas of Europe, that’s for sure. As a matter of fact, as Kiko Llaneras has discovered, it is the well-off with Catalan surnames that support independence, not the working class with Spanish names. That is why it is strange that so many leftwing people support Catalan independence. They are supporting a movement that is to a large extent egoistic and supremacist and shows very little solidarity with the broader community. This is very different from Scottish independentism (see again the Elcano dossier). I remember one day some years ago in Brussels, in one of the dinners organised by CEPS (the think tank) sitting next to a German executive from a big German company, and how he was telling me that they were thinking of changing their headquarters from Barcelona to Madrid. “With all this nationalist craziness, Barcelona was getting parochial, inward-looking”, he told me.

I have been feeling the same, and some academics that have lived in Catalonia for years like Rafael Jimenez Asensio too. Until roughly ten years ago Barcelona looked and felt much more international and cosmopolitan than Madrid. Now the gap has narrowed. Madrid is as vibrant, multicultural and wealthy as Barcelona. As a matter of fact, the average per capita income in Madrid is 36.400 euros, while in Barcelona it is 34.600 euros. Upon a lax tax regime and the centrality of the capital, Madrid has attracted a lot of business over the past decade. This has increased the feeling of grieve in Barcelona. There is a sense that the central Government is especially keen to support Madrid and not that interested in improving the infrastructures of Barcelona. If we look at the period from 1980 to 2016, as Daniel Fuentes has done, from the four more prosperous regions in Spain (Madrid, Basque Country, Navarra and Catalonia), Catalonia was the only one whose per capita income increased less vis-a-vis the Spanish average. One wonders why. I don’t think it is Madrid’s fault.

For many in Catalonia this situation is unfair. Madrid has become with over 6 million people the third largest metropolitan area of Europe (after London and Paris) thanks to the support of the Spanish state. As Jacint Jordanarightly highlights, this has helped the Spanish capital to accumulate and absorb a lot of resources, wealth, talent and, of course, power. All this has made many Catalans realise that if you want to have influence and power in Europe you need to be a nation-state. This gives you a place at the high tables in Brussels. It gives you a European commissioner. Catalonia, Barcelona does not have that, and therefore it is falling behind. The obsession with achieving independence comes partly from this desire, an aspiration that brings together people with very different agendas and backgrounds.

This article was written with my colleague Ignacio Molina and was first published in Handelsblatt Global Edition on the 22 December 2015. The three options still stand

Spain has a new, more fragmented, political landscape.

For the first time since democracy was reinstalled in 1977, the distribution of votes is so dispersed that neither the right nor the left can form a government.

The conservative Popular Party won Sunday’s elections with only 29 percent of the votes and 123 seats, which means that the 40 seats of the liberal Ciudadanos party will not be enough to help it reach the 176 seats necessary for an overall majority.

Similarly, the Socialists – the PSOE – with 90 MPs and the leftist anti-austerity party Podemos, which was the big winner in this election, with 69 seats, also don’t reach this threshold.

In order to rule, they would need the support of a combination made up of a minor leftist party plus the Catalan and Basque regionalists and pro-independence parties. This effectively would require the coordination of up to nine or ten parties given that Podemos is a coalition of four groups.

Needless to say that this would be extremely difficult, especially in a country that is not used to multi-party pacts.

So how can Spain solve its electoral Rubik’s cube?

After listening carefully to the first statements by the political leaders, we think that the following are the three most likely future scenarios. The first is that the center-right PP forms a minority government, with the socialist PSOE abstaining.

The second possibility is that of a minority government by the PSOE with the support and abstention by Ciudadanos and Podemos respectively, or vice versa.

The third option is a snap election.

Reaching an agreement will be extremely difficult, but not impossible.

The first scenario could be feasible for several reasons.

Mariano Rajoy, the leader of the PP, will do what he can to keep his party in power. The Socialists, in turn, will refuse to enter a “Grand Coalition” like in Germany. They are afraid to end up like Germany’s social democratic SPD or, even worse, the PASOK in Greece. But at the same time they are afraid to push the country to new elections, in which even more of the traditional left vote might go to Podemos, a party which has strong momentum right now.

It is important to remember that for a successful investiture the party that wants to govern only needs more support than rejection.

This means that PSOE and Ciudadanos could abstain and see the PP governing in a minority.

In order to convince his electorate that this is the most strategic move, Pedro Sánchez, the leader of PSOE, could ask for the head of Rajoy and several programmatic concessions.

It would then be up to the PP leadership to decide whether they want to sacrifice Mr. Rajoy and some of their decision-making in order to stay in power or prefer snap elections, in the conviction that after this period of instability they might do better because they will win back much of the vote that went to Ciudadanos.

Ironically, exactly for this same reason, Ciudadanos will try to avoid a new election. That means when push comes to shove they might be willing to support the investiture of PSOE.

In this scenario, Mr. Sánchez would need a yes from Ciudadanos and assume Podemos would abstain.

Another variant of this outcome could be that Podemos supports Mr. Sánchez and that Ciudadanos abstains. This is less likely since Ciudadanos has declared that it will never support a government in which Podemos is directly or indirectly involved because its leader Pablo Iglesias is in favour of a binding referendum for independence in Catalonia, whereas Ciudadanos is firmly opposed.

Thus, in this second PSOE-led government scenario the more likely outcome is a PSOE investiture supported by Ciudadanos and with Podemos abstaining.

All three would benefit. They could all claim that they have pushed for “change,” which is a feature of all of their campaign slogans.

PSOE would get into power, Ciudadanos would become the kingmaker, its agreement crucial for structural reforms and Podemos would mount a strong opposition, and back only those laws that match its program.

Of course, there are some drawbacks for both PSOE and Ciudadanos in this scenario.

Ciudadanos has said they would not support a government led by the party that did not win the election. If it were to do so, the party would disappoint many of its supporters that came from the right, and hence lose part of its base very early on in its consolidation as the liberal party of Spain.

PSOE, for its part, might not want to govern in a weak position with Podemos in the opposition.

So if either of the first and second scenarios comes to pass, with a minority government, every law will be contested and need to be approved in a complex framework unprecedented in Spain.

Or we throw the Rubik’s cube again, have a snap elections and start playing a new game, in the hope that it is more like the old one.